Encryption describes the process of jumbling up data in such a way that it can not be easily understood by those who are not authorized to do so.
The jumbled data is stored as ‘ciphertext’.
A key, known as a decryption key, is required in order to access the original data.
Encryption is used to keep prying eyes away from data that is in transit between sender and recipient (data sent over the web during an online banking transaction, for example).